Fabian Thylmann and His Revolutionary Porn Business Model

Harnessing the InternetThe German Porn King's Revolutionary Model

When German national Fabian Thylmann was arrested, he became known as the king of the porn industry. His sex company operates like a modern corporation, silently and digitally. He has become a major presence on the Internet, much like Amazon and Wikipedia.

In a stuffy film studio in Los Angeles, 11 porn stars are sitting on stained sofas, trying to make a film that needs to be better than the product Fabian Thylmann has to offer.

Thylmann, a German from the western city of Aachen, surprised the industry when he transformed a stale pornography business into a multinational corporation. Everything that had to be done furtively until then, and seemed somehow behind the times, suddenly looked modern when Thylmann came on the scene, because he wasn't one of those clueless, part-time pimps who had gotten into the porn industry. Thylmann is a programmer. While others seem to pay attention to little more than dildos, Thylmann thinks about things like good Internet connections that can transmit any scene in the world to any computer in the world. He operates in a different dimension, which is why his competitors are having such a hard time keeping up with him.

In Los Angeles, actor Tommy Pistol has had enough of the heat, and he gets up to stand in front of the only air-conditioner in the room. Pistol, who looks a little like a young Robert De Niro, recently acted in a satire in which a cucumber slicer played a key role. His unzips his pants, pulls down his underwear, steps into the cold air and says: "Ah, that's better."

Sitting behind him is Sarah Shevon, currently a brunette and known in the industry for her willingness to experiment. She's looking at her legs with concern, because they don't look very good at the moment. A few days ago Shevon was in a bondage shoot that included anal fisting, and her legs have seemed "strangely fat" to her since then. Maybe something broke, she says. Another actress nods sympathetically and recommends a product containing vitamin B12.

Mr. Pete, a 12-year veteran of the industry and the recipient of three so-called "porn Oscars," is masturbating listlessly on a sofa. He says that he used to make $250,000 (189,000) a year, and that he now makes only about half as much, even though he works a lot more.

The only one who's in a good mood is James Deen. He was the last one to arrive on the set, after parking his $100,000 sports car, a Nissan GT-R, next to a small dented car. He passes around his cell phone to show the group pictures of him in the new Louis Vuitton fashion collection.

A Mysterious Competitor

They are all here to shoot a remake of the classic horror film "Carrie." The big final scene is an orgy, and director Kimberly Kane is pacing nervously back and forth. This is her first porn film with real dialogue and a plot consisting of more than just uninhibited sex. Before the final scene, the director reminds the actors that they're about to experience an angry group sex scene, and that they should all get aggressive.

The production of this horror porn film is bringing together the hottest and most reliable talents in the industry, but it's yet another desperate attempt to fight off Thylmann, the competitor from Germany who has been trying to dominate the world of pornography for years. He is more outrageous than anyone else, certainly more skillful and perhaps also smarter. There are few photos of the reclusive Thylmann, and people know very little about him, except that he is 34 and happily married, as he once said.

Porn producers are usually content to have their own studio, but Thylmann wasn't that easily satisfied. He structured his business in a more professional way from the start, and today he heads one of the world's largest pornography companies. He makes his money with bootleg films that are placed on the Internet, as well as with films that are marketed legally online. Thylmann has also increased his profits with online webcam pages, the most recent trend in the industry.

Thylmann's corporation is called Manwin, a convoluted entity consisting of more than 30 companies, including many large websites and brands, like YouPorn, Pornhub, Brazzers, Mofos and many others. When the clicks to all websites in his company are added together, it comes to several billion a year. These are dimensions normally reached only by the big players on the World Wide Web, like Amazon and Wikipedia. Only giants like Facebook and Google are ahead of him.

Tax Evasion Charges

Thylmann has had an impressive career, one that resembles the swift rise to prominence of Facebook founder Mark Zuckerberg, or of the founders of Google.

But on Dec. 4, something happened that surprised even the strategy-minded Thylmann: He was arrested at his estate on a hill in the posh Brussels suburb of Tervuren. Between 7 and 8 a.m., Belgian police officers and German tax investigators, about 100 officers in total, drove through the concealed entrance and past a collection of expensive sports cars, and presented Thylmann with a warrant for his arrest. In his house, as well as in Manwin's Hamburg offices, IT specialists secured several terabytes of data.

Thylmann spent several days in a Belgian prison until last Thursday, when he was taken to Germany, where he is now awaiting indictment. He is suspected of tax evasion amounting to a sum in the double-digit millions.

In the coming months, German investigators will spend a lot of time dealing with this man, who developed a business of previously unheard of dimensions that would be unimaginable without the Internet: digital pornography, available worldwide, created for countless, anonymous customers in nondescript living rooms, people who no longer buy DVDs or go to adult movie theaters, who no longer lock themselves into small video booths, and who no longer have to take any risks to achieve a small orgasm.